The Wnt/-catenin system is essential for skeletal development in embryogenesis and regulates bone mass in adult life. However, the mechanisms by which Wnt/-catenin signaling stimulates osteogenesis and bone formation in the post-natal skeleton remain nebulous. Recent data suggest that -catenin provides critical regulatory cues at two points during the osteoblast differentiation program; in immature but committed osteoblast precursors -catenin favors maturation into matrix secreting osteoblasts and expansion of the osteoblast precursor pool; in differentiated osteoblasts it inhibits osteoclastogenesis and perhaps terminal osteoblast differentiation. In previous studies, we demonstrated that -catenin interacts with bone morphogenetic protein-2 and 4 (BMP-2/4) in producing new bone. Indeed, we find that BMP signaling is required for full osteogenic stimulation by -catenin, whereas Tcf/Lef-dependent transcriptional activity is not. We also find that -catenin is competitively recruited to either BMP or Wnt signaling pathways, and that the intersection of BMP and -catenin signaling is, at least in part, mediated by Smad4/-catenin interactions. The central hypothesis of this project is that the pro-osteogenic action of -catenin originates from its interactions with BMP signaling, and specifically Smad4, in immature osteoblasts, resulting in competitive recruitment of -catenin to either canonical Tcf/Lef-dependent or Smad4-dependent signals. Thus, -catenin can function as stimulator of either proliferation, via Tcf/Lef transcriptional activity, or maturation of immature osteoblasts, via recruitment into Smad4-containing transcriptional complexes. To test this hypothesis we propose to, 1: determine the dependency of -catenin pro-osteogenic action on BMP signaling via Smad4; 2: analyze the role of Smad4 in modulating Wnt-dependent osteogenesis and Tcf/Lef signaling; 3 analyze the molecular interactions between Smad4 and -catenin for osteogenesis. We will use in vivo and in vitro approaches based on inducible, conditional gene ablation or activation models to study whether interference with Smad4 expression alters -catenin pro-osteogenic action and canonical Tcf/Lef-dependent activity. Considering the fundamental role of -catenin in bone cell regulation, understanding the mechanisms by which -catenin delivers either a mitogenic or a differentiation signal is essential to gain a full picture of the molecular network by which bone development and homeostasis are controlled. The proposed studies will also disclose the biologic importance of a molecular interaction that may be used as a new target for bone anabolism.